Executive says LV housing poised to rally - Business

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Feb. 24, 2009
Copyright © Las Vegas Review-Journal

Executive says LV housing poised to rally

By HUBBLE SMITH
LAS VEGAS REVIEW-JOURNAL

Housing in Southern Nevada

Lawrence Yun, chief economist for the National Association of Realtors, speaks Monday at Green Valley Ranch Resort.
Photo by Craig L. Moran.

Las Vegas will lead the nation's housing market recovery, probably starting in the second half of the year, the chief economist for the National Association of Realtors said Monday.

Low mortgage rates, combined with first-time homebuyer assistance from the federal stimulus package, will push buyers off the fence and into affordable homes, Lawrence Yun said at the Realtors association's Rocky Mountain Regional Conference held at Green Valley Ranch Resort.

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"I think Vegas will be the bellwether of how the nation will recover," he said. "Rising sales could help stabilize prices by the end of the year. Vegas is a leading edge and portends what's coming for the rest of the country and also for financial institutions."

Prices are still falling, but monthly sales of existing homes have doubled for the past few months, a precondition for prices to stabilize, Yun said.

The long-term prospect for Las Vegas is bright because baby-boomers reaching retirement age are migrating to cities with warm climates and favorable tax structures, the economist said.

Yun, who earned a doctorate degree in economics from University of Maryland, said President Obama's stimulus plan is going to be a "net positive" on foreclosure mitigation. However, he'd rather see the $75 billion for loan modification go to the Federal Reserve to drive mortgage rates lower.

The homebuyer tax credit accounts for less than $10 billion of new $787 billion stimulus package, a rather small amount, but nonetheless sufficient to help spark a comeback, he said.

"I'm a little disappointed that it didn't address as much as it could have, given the size of the bill," Yun said.

The stimulus package creates an $8,000 tax credit for first-time homebuyers and raises loan limits to $720,000, though not in Las Vegas. It will keep mortgage rates low through the Troubled Assets Relief Program and will lower foreclosures through loan modifications, Yun said.

That's going to raise a "moral hazard," he said. People who purchased homes responsibly, who bought within their means and didn't skirt lending requirements, are wondering why they're not getting help while others are.

"If the housing market recovers, it's money well spent. If not, it will be difficult to get the second $350 billion in TARP," he said.

Housing is the source of the national recession, Yun said. The boom from 2000 to 2005 was an "artificial boost" to home values and the general economy as well. Now, with declining home prices, consumers are more cautious about spending.

The second part of that is the "bleeding" of bank balance sheets, he said. Tightened credit flow is hampering the economy.

"We have to go through recession to take exuberance out of artificial growth," Yun said. "Now I'm afraid the economic downturn could be snowballing and hard to stop without the stimulus package."

The media report that new home sales have collapsed, but they're missing the real story, he said. A more accurate interpretation is that builders have cut back on production, which is the way to correct inventory, so naturally there will be fewer sales, Yun said.

Home builders in Las Vegas pulled just 183 new home permits in January, compared with 353 in the same month a year ago, according to SalesTraq research firm. The 5,550 permit total for 2008 was down 53.2 percent from the previous year.

The home-building industry won't recover until 2010, Yun predicted. He forecast an increase of 10 percent to 20 percent in existing home sales nationwide.

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.

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Please enter your name Name: Please enter your email Email: Please enter a comment COMMENTS : (word count limit is 300) You have reached the maximum number of words allowed Current Word Count: Note: Comments made by reporters and editors of the Las Vegas Review-Journal are presented with a yellow background. perry wrote on March 08, 2009 12:19 PM: i went to palm spring last year i went to the casino i didn't see no different once u get passed the door i knewed then las vegas was in trouble perry wrote on March 08, 2009 12:16 PM: F those executive they don't know what they talking Mike Wilson wrote on March 02, 2009 01:03 PM: "Leading the Nation" eh? LOL - I love it when these NAR lunatics get quoted in stories. The RJ has become a platform for the NAR to publish their propaganda for free. The sad thing is if you guys were SO good at predicting things, we would've never reached this mess in the first place. Spare us your idiotic forecasts. perry wrote on March 01, 2009 08:36 AM: this national assocition of realtor he hoping it will bounse back he need as new bently mo' betta' wrote on March 01, 2009 05:41 AM: Slip a dash in there and what do you have? MORON-GO jss wrote on February 28, 2009 04:57 PM: different perspective, he says new house sales decline because builders cut back I would ask why builders stop building if new houses go well, what a nonsense, perry wrote on February 28, 2009 02:48 PM: judy you are right hate to said the days are over for las vegas. build build mentality hurt this city you seeing empty store front u see houses completely dark at night. u not going to see people people drive 4 hours to come here when u can drive to riverside to gamble perry wrote on February 28, 2009 02:42 PM: and i know like the comment from TEV obama not going to paid for my house or any1 house he have to clean up the messed from previous administration did like the news conferance he had after 9/11 he said spend baby spend that not going to happen anymore middle class not going to do it anymore. alot thing are going to come out about his 8 years he was crappiest president we had or ever will had perry wrote on February 28, 2009 02:36 PM: realtor hoping for a rally not yet realtor need to paid for there expensive car housing hasn't hit bottom the moratorium on foreclosure from fannis and freddie ended on end of january look for big spike next coming months you know let the bank take the houses home is were the heart is i knew the ride would end in las vegas. when thing do get better people wll be wiser and smarter. i know i will Mark wrote on February 25, 2009 06:27 PM: Get in, it's gonna be a wild ride. Rally Baby, Rally. Ahhhhh. Read All Comments